2025 (1) TMI 1473 - AT - Income Tax

Tribunal overturns rejection of trust's registration due to filing error, directs reconsideration under correct section 12A(1)(ac)(iii).

Torna Rajgad Parisar Samajonnati Nyas Versus CIT (Exemptions), Pune

Torna Rajgad Parisar Samajonnati Nyas Versus CIT (Exemptions), Pune - TMI ISSUES PRESENTED and CONSIDEREDThe core legal issue in this case was whether the rejection of the application for registration under section 12AA of the Income Tax Act by the CIT, Exemption, Pune was justified. The specific questions considered were:Whether the application for registration was filed under the correct provision of the Income Tax Act.Whether the CIT, Exemption, Pune was justified in rejecting the application based on a typographical error in the application form.Whether the assessee trust should be given an opportunity to correct the error and resubmit the application under the appropriate provision.ISSUE-WISE DETAILED ANALYSISRelevant legal framework and precedents:The legal framework involves the provisions of section 12A of the Income Tax Act, which pertains to the registration of trusts for tax exemption purposes. The relevant subsections are 12A(1)(ac)(iii) and 12A(1)(ac)(vi), which outline different requirements for registration based on the status and history of the trust. Precedents from similar cases, such as Shree Swaminarayan Gadi Trust vs. CIT and Raj Krishan Jain Charitable Trust, were considered, where the Tribunal allowed appeals in similar circumstances.Court's interpretation and reasoning:The Tribunal interpreted the mistake in filing under section 12A(1)(ac)(vi) instead of the correct section 12A(1)(ac)(iii) as a typographical error. It emphasized that such an error should not be a ground for outright rejection if the trust is otherwise compliant and genuine. The Tribunal reasoned that the CIT, Exemption, Pune should have allowed the assessee an opportunity to correct the error.Key evidence and findings:The Tribunal noted that the assessee trust was already registered under section 12A since 2002 and was seeking registration under the new provisions due to changes in the law. The Tribunal found that the error was inadvertent and not due to any lack of genuineness or compliance on the part of the trust.Application of law to facts:The Tribunal applied the law by considering the precedents where similar errors were rectified without penalizing the applicants. It focused on the intent and compliance of the trust rather than the procedural mistake in the application form.Treatment of competing arguments:The Tribunal considered the arguments from both sides. The Revenue's reliance on the procedural error was acknowledged, but the Tribunal found the assessee's argument for rectification more compelling, given the precedents and the nature of the error.Conclusions:The Tribunal concluded that the CIT, Exemption, Pune erred in rejecting the application based solely on a typographical error. It directed the CIT to treat the application as filed under the correct provision and to provide the assessee with a reasonable opportunity to present their case.SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning:The Tribunal held that 'the typographical error deserves to be corrected,' and emphasized the need for 'reasonable opportunity of hearing to the assessee.'Core principles established:Technical errors in application forms should not be grounds for rejection if the applicant is otherwise compliant and genuine.Applicants should be given an opportunity to correct errors and resubmit applications under the correct provisions.Final determinations on each issue:The Tribunal set aside the order of the CIT, Exemption, Pune, and directed the application to be treated under section 12A(1)(ac)(iii).The Tribunal remanded the matter back to the CIT for fresh adjudication, allowing the assessee to provide supporting documents and evidence.The appeal was allowed for statistical purposes, emphasizing the correction of procedural errors and adherence to substantive compliance.